2018 (9) TMI 606 - HC - Income Tax

Deduction u/s 80HHE - exports made by the assessee for the previous year relevant to assessment year 1992-93 - Held that - This Court is unpersuaded with the Revenue s contentions; firstly, for the previous year as well the assessee s claim under Section 80HHE of the Act for similar receipt of export proceeds for earlier periods, was allowed. Apart from that the fact remains that the amounts were supposed to be received, but were not received, on account of extraneous political circumstance, i.e. disintegration of Soviet Union. In these circumstances, as and when the amounts were received, the assessee did claim deduction albeit in the course of assessment proceedings. This occurred at a point of time when there was no bar in such claims the restriction was imposed by an amendment in the Finance Act, 2009 with retrospective effect from 01.04.2003. Consequently, the assessee was not barred from claiming the deduction, when the amounts were in fact received by it. - decided against revenue

Summary

Issues:
- Deduction under Section 80HHE for exports made in the previous year relevant to assessment year 1992-93

Analysis:
1. The Revenue appealed under Section 260A of the Income Tax Act, 1961, questioning the correctness of the ITAT's decision on the deduction under Section 80HHE for exports made by the assessee for the previous year relevant to assessment year 1992-93.

2. The Assessing Officer disallowed the assessee's claim for deduction under Section 80HHE during the scrutiny of assessment for Assessment Year 1996-97, arguing that the deduction should have been claimed when the export proceeds were realized within a specific time frame. The assessee had not initially claimed this deduction when filing returns.

3. The assessee claimed the deduction under Section 80HHE during assessment proceedings, supported by a certificate from a Chartered Accountant as required by the Act. However, the AO did not accept the claim, stating that the foreign exchange receipts were delayed due to political circumstances, specifically the disintegration of the Soviet Union.

4. The CIT granted relief to the assessee, emphasizing that the consideration for export was received in the relevant year, and therefore, the deduction was justified under Section 80HHE. The Tribunal also upheld this view, citing similar disputes in previous years.

5. The Tribunal rejected the Revenue's appeal, noting that the amount was taxed in the year it was received, justifying the deduction claimed by the assessee. The Tribunal's decision in favor of the assessee in a previous year's dispute was also highlighted.

6. The Revenue contended that the deduction was wrongly granted for a period after the receipt of export proceeds and that the assessee did not initially claim the deduction. The AO had rightfully declined the deduction during assessment.

7. The Court disagreed with the Revenue, noting that similar deductions were allowed for previous years and that the delay in receiving export proceeds was due to external political factors. The assessee claimed the deduction when the amounts were received, and there was no legal bar against such claims at that time.

8. Ultimately, the Court dismissed the Revenue's appeal, ruling against the question of law framed by the Revenue. The decision upheld the assessee's right to claim the deduction under Section 80HHE for the relevant year when the export proceeds were received.